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Ten Truths About Solving Problems of PovertyTuesday, 27th September 2011 at 1:51 pm

As it celebrates its ten-year anniversary, social impact investment organisation Acumen Fund is sharing what it has learnt about solving the problems of global poverty.

Acumen Fund is a Not for Profit global venture fund that invests in entrepreneurial approaches to solve problems of global poverty. Over the last ten years, the Acumen fund has seen over $60 million has been invested in 57 enterprises that serve the poor.

The 57 enterprises that have been funded have created 35,000 jobs and impacted the lives of more than 40 million of the world’s poorest people, according to the Fund.

Acumen Fund invests what it calls ‘patient capital’ in projects that address the areas of health, energy, agriculture, water, housing and education projects. The Fund says the key to the success of the projects is that they are sustainable and scalable.

The Acumen fund was started in 2001 with the idea of changing the way the world tackles poverty. At the time the organisation says there were few organisations using an investment model to fight poverty in the developing world. Today, the Acumen Fund says there are at least 199 organisations in the emerging ‘impact investing’ sector.

While they are proud of their accomplishments, the Acumen Fund says they have learnt as much from the struggles they have faced along the way.

““Poverty” is not just about money. What keeps people from realizing their full potential is lack of choice and opportunity. It is this choice – this dignity – that human beings crave.”

Neither grants nor markets alone will solve the problems of poverty

“We are not going to solve the problems of poverty by just pouring money on them, nor can we sit back and let markets take their course and pretend that billions of poor people’s lives will be transformed by an invisible hand. This isn’t about “trade versus aid,” it’s about building systems that encourage – indeed demand – real, sustained, and honest engagement with low income people as active participants in their lives. “

Poverty is a description of someone’s economic situation, it does not describe who someone is.

“Low-income people face a different set of constraints because of their economic situation, but they make decisions, like everyone, that are based on status and beauty and avoidance of risk, and not just “what’s good for them.””

We won’t succeed in the long term without cultivating local leaders, local money, and strong local communities.

“Institutions and leadership will always outlast the money spent on any particular program. Yet all too often, poverty alleviation programs are designed in conference rooms half a world away, with local buy-in bolted on all too late in the process. ”

“Acumen Fund doesn’t create the “next great idea” – we look for entrepreneurs with a powerful innovation and the drive and skills to make it happen. “

Great people, every time, no exceptions.

“Great business ideas are just that – ideas. The real work is the drive and passion to execute in challenging environments."

"Hundreds of business plans cross our desks every year, and we’ve learned that nothing comes close to mattering as much as the entrepreneur and her team. A business plan, an innovative product, money in the bank – these are all secondary.”

Great technology alone is not to answer.

"No matter how great a new product is for the poor, it almost never sells itself. People buy services that they understand: they don’t buy technologies alone."

"Innovations in delivery – which require genuine input from customers, working partnerships with distributors, and getting economic incentives right – are often more important than elegant designs. No matter how great an invention is, the business has to function in the real world where dealers, distributors, business partners, employees, and especially customers must vote in favor of your product each and every day"

If failing is not an option, you’ve ruled out success as well.

"Creating new blueprints for social change requires taking bets on innovative business models, on sometimes-untested entrepreneurs, and on emerging leaders. We reach far, and sometimes we come up short. What’s important is learning from these failures and using them to get better at what we do. Openness to failing opens us up to the possibility of real, groundbreaking success."

Governments rarely invent solutions, but they can scale what works.

"We will often be disappointed if we expect governments to create new solutions. But the public sector is an integral partner when we look to scale what works."

There is no currency like trust, and there are no shortcuts to earning it.

"Low-income communities are often understandably wary of outsiders coming in with “solutions to their problems.” Having been short-changed in the past, they expect to be short-changed again."

"Trust is the most precious commodity we can offer. Building it takes time, and it can be destroyed in an instant. It isn’t so much what we do most of the time, but how we do it that counts. We learn this over and over."

Patient capital investing is built upon a system of values; it is not a series of steps to be followed.

"Every day we make hard, sometimes excruciating decisions – between profit and impact, efficiency and equality, short-term and long term – in a complex, imperfect world that craves quick, easy answers. This takes discipline, focus, and sacrifice, along with compassion and empathy. Effecting real change, in other words, is hard work. It requires nothing more and nothing less than the art of leadership. "

Acumen Fund says over the next ten, their aim is to build a world-class global institution capable of fundamentally transforming how the world fights.

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